Who should read this: Anyone with a mortgage or considering one, particularly those looking to remortgage, reduce their mortgage term, or seeking clearer advice options.
Why it matters: The FCA’s new rules from July 2025 make it easier to switch mortgages, reduce your term, and get the information you need without unnecessary barriers.
The Financial Conduct Authority (FCA) has introduced significant changes to mortgage rules, outlined in their Policy Statement PS25/11 published in July 2025. These changes aim to simplify the mortgage process and give you more flexibility in managing your home loan.
The FCA has expanded the Modified Affordability Assessment (MAA) to include switching to a new lender. This means if you’re looking to remortgage, you may qualify for a simpler assessment process if your new mortgage is more affordable than either your current deal or what your existing lender is offering.
To benefit from this simpler process, you’ll need to meet these criteria:
Previously, reducing your mortgage term required a full affordability assessment.
The FCA has removed this requirement, recognising that paying off your mortgage faster is generally a positive step. Lenders will still consider whether it’s right for you under their responsible lending policies, but the process should be more straightforward.
The rules now make it easier for lenders to provide helpful information without immediately triggering formal advice requirements. This means you can have more open conversations with your lender about your options before deciding whether you want personalised advice.
If you choose to proceed without advice (execution-only), lenders must ensure you understand what protection you’re giving up and actively confirm you want to proceed this way.
Of course, as independent mortgage advisers, we would always recommend seeking advice from us, with our understanding of the whole market, in the first place.
These changes align well with ethical financial practices by promoting transparency and consumer choice. The simplified processes reduce unnecessary barriers while maintaining important protections.
For those of us who value ethical lending practices, these rules support:
The rules particularly benefit those who’ve been stuck with their current lender due to affordability assessment barriers, even when better deals were available elsewhere.
These new rules make switching easier, potentially opening up more options to you. However, we still recommend starting by talking to an adviser. They will be up-to-date on the whole market, guide you through your options to ensure you’re getting the best outcome for your circumstances. They will also be able to help you with timings and processes to make sure you take advantage of any fluctuations in the market, to ensure you secure the best deal within your window for switching.
At present, the effort involved in switching lenders puts many people off, in our experience. However, this simplified assessment process should enable more people to benefit from the best rates.
First, work out how much extra you could comfortably afford each month – factoring in a buffer for potential future rate rises.
Thanks to the rule changes, you can now apply for a term reduction without facing a full affordability assessment. It’s worth weighing up the long-term interest savings against keeping some flexibility in your monthly budget.
Remember, even small reductions in your term can save significant amounts over time.
While the new rules make it easier to get information from lenders, professional mortgage advice remains particularly valuable for comparing products, understanding the full costs involved, and navigating other factors to consider for lenders, such as customer service levels, additional borrowing for energy efficiency and other home improvements, plus ethical lending options.
The changes give you more freedom to explore your options, but an experienced adviser who is fully focused on market dynamics can help ensure you’re making the most of these new opportunities while avoiding potential pitfalls.
These changes represent the first steps in the FCA’s broader Mortgage Rule Review. They acknowledge that the previous rules, while well-intentioned, sometimes created unnecessary barriers for borrowers.
At WR Ethical, we’re committed to helping you understand and benefit from these changes. Our advisers stay current with all regulatory updates and can guide you through your options, whether you’re looking to remortgage, reduce your term, or simply understand what’s available.
Book a free consultation or email us via hello@wrethical.com to discuss how these changes might benefit you.
Please note: Individual lender criteria still apply. Reducing your term may result in higher monthly payments, and switching lenders may involve fees or other changes.
Your home may be repossessed if you do not keep up repayments on your mortgage.
At WR Ethical, we're committed to helping you understand your options, whether you're looking to remortgage, reduce your term, or simply understand what's available.
